Appraisers Beware: Use Competent Data!

In a recent Tax Court decision, Judge Kathi Fiamingo affirmed the Burlington County Board of Taxation’s judgment of a 2017 assessment of a single family residence where plaintiff’s expert did not present credible and competent evidence from which a true value could be adduced.

When presenting evidence in a real estate tax appeal in New Jersey, the plaintiff has the burden of proving that the assessment is erroneous.The judgment of the County Tax Board is presumed correct. Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985). This presumption can be rebutted by introducing “cogent evidence” of true value that is “definite, positive and certain in quality and quantity. MSGW Real Estate Fund, LLC, 18 N.J. Tax at 413 (quoting Aetna Life Ins. Co. v. Newark, 10 N.J. 99 (1952)). Therefore, at the close of plaintiff’s proofs, the court must be presented with evidence that raises a “debatable question as to the validity of the assessment.” Id. at 376.

Plaintiff’s evidence in the recent case was from its expert, a New Jersey certified general real estate appraiser, who utilized only the market approach to valuation and relied on recent comparable sales. Six comparables were used, although one was discarded by the court as a listing and not a completed sale. The primary parameters utilized included properties in similar neighborhoods and those with similar functional utility and appeal, however, the appraiser failed to adjust for proximity of the sales to the Garden State Youth Correctional Facility.

The comparables selected were within an eighteen month period preceding the valuation date and the sales prices ranged from $250,000 to a low of $210,000. The adjusted sales ranged from $210,000 to $260,300. The expert testified he made no adjustment for the proximity of the comparables to the Garden State Youth Correctional Facility. However, while he did not make an itemized adjustment, he admitted the proximity to the correctional facility’s proximity pushed his conclusions to the lower end of his range. The court noted that differences between comparable property and the subject property were expected, however, adjustments should be made recognizing and explaining their differences and then relating the two so that an estimate of value can be determined. U.S. Life Realty Corp. v. Jackson Township, 9 N.J. Tax 66, 72 (1987). Since the adjustment was made but not quantified or disclosed, the court was unable to determine a value from the comparables.

The court found that plaintiff’s evidence did raise a debatable question regarding correctness of the assessments which led the court to deny the defendant’s motion to dismiss the appeal at the conclusion of plaintiff’s case. However, plaintiff was obligated to present the court with credible, competent evidence from which a true finding may be adduced. Here, plaintiff’s evidence was deemed not competent since their appraiser did not adjust the data appropriately.

A copy of Cook v. Bordentown Twp. can be found here.